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Palmieri v. State of New York

United States Court of Appeals for the Second Circuit · 1985 · Civil Procedure

Civil ProcedureProtective OrdersSealing OrdersInterventionRule 26(c)protective ordersealing orderintervention

Facts

In a private antitrust suit involving participants in New York City's ready-mix concrete industry, a magistrate supervised discovery and settlement discussions and entered protective and sealing orders designed to keep discovery and settlement matters from disclosure, including to government agencies. The magistrate stated that defendants intended to furnish discovery in reliance on the protective order and later explained that meaningful discovery and settlement would have been difficult without enduring confidentiality. After the parties reached a settlement under sealed conditions, the New York Attorney General, who was conducting an ongoing state antitrust investigation with substantial overlap in subject matter, moved to intervene and to modify the sealing orders. The district court granted access to the settlement information for the grand jury and Attorney General, despite defendants' claim that they had relied on the sealing orders in settling.

Issue

May a district court modify sealing orders protecting settlement negotiations and terms to allow access by a state grand jury and the State Attorney General without expressly finding either that the original orders were improvidently granted or that the state showed extraordinary circumstances or compelling need? Relatedly, what standard governs modification when parties relied on the confidentiality orders in reaching settlement?

Rule

Absent an express finding that a Rule 26(c) protective or related sealing order was improvidently granted, or that extraordinary circumstances or a compelling need justify disclosure, a court should not modify the order merely to accommodate governmental access for a criminal investigation. When parties have relied on the confidentiality order, that reliance creates a presumption in favor of enforcing the order, and the government's own investigatory powers raise a rebuttable presumption against modification unless it demonstrates that the required standard is met. Improvidence turns on whether the issuing judicial officer reasonably should have recognized a substantial likelihood that the settlement would facilitate or further criminal activity.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In a federal trade-secrets suit in Chicago, Magistrate Elena Morris entered a Rule 26(c) confidentiality order and later sealed the parties' settlement talks after repeatedly assuring both sides that no state investigators would receive the materials. The parties then exchanged sensitive documents and settled. Six months later, the Illinois Attorney General moved to modify the orders, arguing only that the records would likely be useful in a criminal price-fixing investigation.

How should the district court rule if it makes no express finding about the propriety of the original orders and finds only that the materials may help the investigation?

Explanation. A court may not modify a Rule 26(c) protective order or related sealing order merely to accommodate government access. Under the majority rule, absent an express finding that the order was improvidently granted or that extraordinary circumstances or compelling need justify disclosure, modification is error. Mere judicial speculation that the materials would be useful does not satisfy that standard. (Derived from Palmieri v. State of New York (n.d.).)